Ontario Cap and Trade

What is the Ontario Cap and Trade ? Who will be affected and what does it mean for Canadians?

All around the world, climate change is an issue of increasing concern and since the current damage cannot be reversed, reducing Greenhouse Gas Emissions (GHG) globally has become a top global priority.

Why is climate change such an important issue? Because the effects of greenhouse gas emissions causes global warming, the effects of which have been consistently felt around the world for the past several years. And each year the effects get a little worse. According to researchers the amount of carbon dioxide – the gas that is released when fossil fuels are burnt – currently in the air will take thousands of years to disappear.

So the time to act is now.

Scientists are predicting that if nothing is done to decrease the amount of carbon dioxide being released in the atmosphere every day, we are looking at experiencing periods of extreme weather, drought, heavy rain and other climate abnormalities resulting in poor crops, intense heat waves, and catastrophic events such as tsunamis and earthquakes. These types of extremes can cause deaths, heavy damage to a city and can cripple the economy. In the end everyone suffers from global warming, not just physically but financially as well because climate change affects the price of food, it raises the cost of insurance, and raises taxes just to name a few.

Ontario’s contribution to decreasing the negative effects of climate change has resulted in the launching of the Ontario Cap and Trade Program. The program was launched in January 2017 and it works by setting a cap on greenhouse gas emissions while also giving businesses the flexibility and the resources to meet their goals. According to the plan, over the next three years (2017-2020) the caps set in place will reduce Ontario’s greenhouse gas emissions by 8 to 10 megatonnes. As businesses get better at reducing their GHGs, the hope is to continue bringing that number down.

How Does it Work?

Businesses and industries have to apply, register and submit a GHG emissions report in order to participate in the plan. Once approved, they must abide by the rules and regulations outlined within the program. In order to encourage the participation of businesses, Ontario is providing them with an incentive and essentially putting a price on carbon dioxide and their usage.

The Cap portion of the program refers to providing an allowance and limiting the amount of GHG a company can release. For instance, one allowance refers to one tonne of carbon dioxide. The total cap for 2017 is 143,332,000 tonnes. During the first transitional run of the program, most companies (who meet certain criterion) will be allocated the number of allowances they need without having to pay anything for it. By providing free allowances Ontario is enabling companies to have some breathing room while trying to reduce their pollution and adapt to newer, environmentally friendly technology.

However, over time (starting in 2018) the allocated allowances will go down and if a company needs more they will have to Trade for the allocation or buy more from another company that didn’t use up all their credits because they successfully managed to reduce their GHG. In some special cases, for instance fuel suppliers or electricity generators, free allowances will not be provided and they will have to purchase them.

The Cap and Trade Program will especially benefit those companies who are already conscious and careful about their emissions, in fact a plan is already in place where early reduction credits will be provided to those companies who act early and penalize those who fail to comply.

The logic is simple, the less a company pollutes, the more money they save.

Who Does it Affect & What Does it Mean for Canadians?

The program is currently affecting the residents of Ontario where every household is paying approximately $13 more a month in heating and fuel bills. This money (a projected $1.9 billion every year) will then be used in a number of other projects such as electric cars, expanding the public transport system, increasing energy efficiency in residential buildings etc. In the long run these projects will help lower costs in an average household. Some of the projected money will also go towards helping industries invest in the technology they need to reduce carbon costs. Rules and provisions have been put in place to make sure there is accountability and transparency at all times and to ensure the money is always used strictly for projects related to climate change.

By investing in this way the project comes full circle with the cooperation and help of everyone (Ontarians and businesses).

The long-term goal is for all of Canada to adopt a similar program and even though it may slightly increase household costs, it is only a short-term disadvantage. Over time Canada will be a greener country because of this and Canadians will enjoy a healthier economy as new jobs and benefits are created both at home and globally.

As more companies join the program, it will serve as a wake up call to the biggest emitters of GHG that something needs to change and force them to participate as well or lower their greenhouse gas emissions.

The ministry of Ontario is currently accepting applications from businesses for 2018. The deadline to submit an application is September 1, 2017. Application forms can be found online.

We tend to take the earth for granted and don’t realize how significant an issue climate change actually is. Ontario is heading in the right direction and businesses need to participate willingly because in the end we all breathe the same air so it affects us all.

Think about what kind of world you want to leave behind for your children and grandchildren and then think twice before polluting.